Keep Term Sheets Simple for Quicker Cash to Spend

Gust

Remember a term sheet agreement is not a deal until the check clears. It’s true that angel investors typically do not present entrepreneurs with overly complicated deal structures, especially when compared to venture capitalists.

Keep Term Sheets Simple for Quicker Cash to Spend

Startup Professionals Musings

Remember a term sheet agreement is not a deal until the check clears. It’s true that Angel investors typically do not present entrepreneurs with overly complicated deal structures, especially when compared to venture capitalists.

Trending Sources

Both sides must be fair in a term sheet negotiation.

Berkonomics

A good example was during the negotiation of a term sheet. These usually involve a handful of angel investors, and a few entrepreneurs, who all want to build the very best term sheet for their exciting nascent enterprise. By Basil Peters.

in search of.the ideal term sheet

Seed Stage Capital

skip to main | skip to sidebar 24 August 2009 In Search Of.The Ideal Term Sheet Continuing with our discussion on term sheets (see "Some Thoughts on Term Sheets" and "Closing Term Sheets Quickly" ), today a new "plain vanilla" term sheet was published by Adeo Ressi of TheFunded.com.

allensblog: "Fully-Diluted"

Allen's Blog

In a deal recently, the term sheet offered by the prospective investor contained a reference to the term: "fully-diluted" The company accepted the term sheet and the lawyers drafted the documents. While that deal recovered and closed, it highlights the need for entrepreneurs and investors to understand when so-called defined terms like "fully-diluted" actually need explicit definition in the term sheet.

Knowledge Is Power: Convertible Note Financing Terms, Part II

Gust

In this installment, I’ll dig into the “how” by dissecting an example term sheet based on a real deal. For those playing at home, you may find it helpful to download the sample term sheet from my firm’s website and follow along with the commentary. This may seem like a no-brainer now that you understand the basic structure of a convertible debt financing. These deal terms are simple but significant. On to more specific terms next week.

Bring something to the party when working with others

Taffy Williams

In a different situation, a prospective partner asked a company for a term sheet for a deal. The deal was to take place after a study was completed. Likewise, there was no discussion of the timing of the execution of the deal, scope of the deal, or other such parameters.

Notes on the acquisition process

Chris Dixon

I’ve seen many acquisitions bungled by bankers who were either too aggressive on terms or upset the relationship between the startup and acquirer. Moreover, some public companies insist that you don’t talk to employees until the deal is closed or almost closed. Deal structure: the cap table is an agreement between you and the shareholders that says, in effect: “If we sell the company, this is how we pay out founders, employees, and investors.”

Later-stage rounds and “setting the bar too high”

Chris Dixon

But in reality, assuming the standard preferred structure, the last round investors’ payout is as follows : Scenario 1 : Dropbox exits for greater than $4B ==> investors get a positive return (specifically, exit price divided by $4B).

How to value your company for sale (Part 2)

A Smart Bear: Startups and Marketing for Geeks

Remember how the buyer has his own way of valuing the deal ? You’re skipping a step — trying to decide if the deal is even plausible — but how can you decide that if all you’re doing is thinking about the other side? Do you prefer Deal B?

The Pre-Seed FAQ

K9 Ventures

I’ve been an avid reader of Dan’s Term Sheet while he was at Fortune , and now Pro Rata at Axios. Where did the term Pre-Seed come from? They talk about how deal sizes and stages were changing even back then. When I first started using the term ‘pre-seed’ in 2013, it was almost as a joke since I wanted to make a point that K9 was investing super early. Q: How are most Pre-Seed deals structured?

Knowledge Is Power: Convertible Note Financing Terms, Part V

Gust

As we conclude our convertible note financing series, there are assorted terms commonly seen in term sheets and deal documents that are worth touching on briefly. As I’ve noted before, readers joining this series in progress may find it helpful to download the sample term sheet from my firm’s website and review the earlier posts covering the basics. Having made it almost to the end of our sample term sheet: Documentation.

Knowledge Is Power: Convertible Note Financing Terms, Part IV

Gust

Readers joining this series in progress may find it helpful to download the sample term sheet from my firm’s website and review the earlier posts covering the basics. To account for scenarios in which the startup is acquired before it has a chance to complete a priced equity financing round, most term sheets and deal documents contain a “ change in control ” provision. The company pays off the notes immediately according to their terms, with prorated interest.

Piercing the Corporate Veil of Sweat Equity

grasshopperherder.com

As such, you should make sure to think of the proposals as an investor and get a reasonable term sheet. Three Card Monty Corporate Structures. This is my least favorite thing in the world, being offered sweat equity in a corporate structure that is unnecessarily convoluted.

Clean Deal Terms

David Lee

Sam Altman has a nice post here on a founder-friendly term sheet. He said one thing there that I agree with 100%, among others: I have an allergic reaction to complex deal structures, as they invariably end up with all sorts of unintended consequences. Lately I’ve seen more complex “deal terms” in early stage financings. And in exchange for giving this super pro-rata, the company can negotiate for other terms - namely a higher valuation.

Angel Investing is Where VC was 25 Years Ago

Angel Blog

As I attended sessions, and had conversations, on everything from deal structures to term sheets and deal flow to exits, it occurred to me that I had been in similar conferences about 25 years ago. At the conference last week, there were enthusiastic discussions about forms of investment, term sheets, pre and post investment relationships with entrepreneurs and VCs, portfolio management and valuation.

The downside of high valuations

StartupCFO

In times of rising valuations, it is important for entrepreneurs to think about their long term funding strategy and choose a valuation that is sustainable not just today but over the whole life cycle of your company. When it comes to deal structuring, the higher you push the valuation, the more “protections&# investors will build in. Some term sheets will provide for a full ratchet, meaning that if you do a down round all shares reset to the new, lower price.